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Thursday, 12 January 2012

Time for a financial health check

With finances being stretched as never before many of us will be putting household, leisure and entertainment expenditure under the microscope in 2012.

The family of parenting institute has warned that the average income of households with children will fall by 4.2% between 2012-2016.This equates to a drop in household income of £1250 per year.

For many households this will mean cut backs have to be made in order to square the household budget. For some households this will mean luxuries like gym membership, full Sky package or private healthcare will have to be trimmed or cut out completely.

One useful way to give your finances a health check is to break down your bank statement and credit card bill to help identify where your money goes on a monthly basis.

Priority debts are exactly that and must be paid before other expenses are taken into account .Priority debts would include expenditure like mortgage, rent, council tax and utility bills.

Having deducted priority debts from salaries etc you are left with disposable income to cover food, loans, credit cards etc.This will then give a clear picture to your household financial health.

If there is insufficient money to repay personal loans or credit cards etc then it is probably time to seek advice from a debt advice organisation in order to help identify all appropriate solutions available.

Even if your income and expenditure balance it is worthwhile looking carefully at your expenditure to ensure you are getting the best value for money possible. Utility company tariffs vary considerably for instance and using a comparison website like USwitch could make substantial savings to your energy bills with very little effort on your part.

In summary, as peoples financial belt has to tighten make sure you are getting best value for every pound you spend and where you can get debts down as fast as possible or ideally become debt free.